This project will examine the economic and demographic aspects of inner-city neighborhood revitalization in order to test several important hypotheses concerning this currently observed phenomenon and to assess the likely effects of various urban development strategies. Identification of the mechanisms of neighborhood turnaround will allow us to better understand why it has been a greater force in some cities than in others and what the respective public sector/private sector contributions have been. A model of neighborhood revitalization is being developed and will be estimated for two large American cities which have experienced revival in a number of inner-city neighbornoods in recent years. The analysis emphasizes the interconnections among (1) labor-market and demographic shifts, (2) the response to these shifts by housing markets in different neighborhoods, and (3) the role of the public sector in promoting or giving direction to neighborhood responses. Results of estimating a model of neighborhood choice will allow us to predict the change in demand for any neighborhood, given any set of labor market and demographic changes. Also examined will be the importance for revival of residential structures having high quality potential and scenic and historic amenities. Effects of directly provided public services and large capital projects will be examined, with an emphasis on the effects of neighborhood condition and potential on the returns to capital projects. The principal data sets linking employment markets with residential areas will be metropolitan home interview surveys for Washington and San Francisco. These surveys form a particularly rich micro data base on worker, household, residential location and employment characteristics. They will be supplemented by data on housing and neighborhood quality, data on public sector activity, and city housing inventories.